On Tuesday, regulatory disclosures from Yahoo shed some light on the company’s future following the planned sale to Verizon. The revelations were made during a routine disclosure to the Securities and Exchange Commission (SEC) and they pointed to a name change the exit of embattled CEO, Marissa Mayer.
While many of the planned changes are pending the finalization of a nearly $5 billion sale of the internet company’s core assets to Verizon, the exit of Ms. Mayer would be welcomed by many shareholders.
These shareholders view Ms. Mayer’s time as CEO of the once dominant search engine as largely ineffective. Even though Yahoo was heading towards irrelevance long before Ms. Mayer took over, her time as CEO has done little to change the company’s fortunes.
New York City, USA – November 11, 2015: Sign at the New York Stock Exchange as the e commerce company the Alibaba Group records blockbuster Single’s Day sales in New York City. (Christopher Penler / Shutterstock.com)
In fact, the only positive highlight of her tenure was the Alibaba IPO – though the company has been hard pressed to reinvest the proceeds in a worthwhile effort.
Beyond that, most of the recent news about Yahoo has been less than positive. This includes confirmation of two data breaches. The most recent report came in December when the company acknowledged that the records of close to 1 billion users were compromised.
This incident was so bad Verizon is reportedly reconsidering its planned acquisition of Yahoo. While some version of the deal is likely, most analysts believe Verizon is seeking to negotiate a sizable discount for the company.
Even if the sale does go through, Yahoo’s board needs to map out a long-term strategy for the company’s remaining assets. The SEC disclosure helps to shed some light on the board’s plans as it notes that the new company will change its name to Altaba and will focus on its remaining stake in Alibaba and Yahoo’s partnership in Japan.
Another change would be the exit of four current members of the Board including Ms. Mayer and Yahoo co-founder David Filo, and current Chairman Maynard Webb. While the disclosure document notes that Ms. Mayer’s exit is not due to any disagreement with the board, observers believe the move creates the opportunity to reinvigorate the company’s management.
The newly christened Altaba will look nothing like the current Yahoo. However, this could be a big plus for the company with a pile of cash and the enviable position of being one of Alibaba’s largest shareholders. The company could also be able to aid Alibaba’s move into the U.S. market – one which founder Jack Ma has talked up in recent days.
However, these plans are very much dependent on the sale of Yahoo’s core operations to Verizon. If the sale does not go through, then Yahoo would be in a very tough position. Some industry observers noted the only option might be delisting and then selling parts of Yahoo’s operations to various players.
Potential suitors in this scenario could include Disney, Microsoft, and even Verizon. But most analysts believe the windfall for investors would be significantly less than the current deal on the table from Verizon.